Are you looking after your pension?
September 11th-15th marks Pension Awareness Week! Here’s some important information that we think you should know about your pension.
Pensions are an important part of planning for your future.
A pension is a type of retirement plan that pays out a set amount of money to an individual or their spouse after they retire from work and are a reliable source of income during retirement. This amount is typically based on factors such as the length of the individual's employment and their salary.
One of the main benefits of having a pension is that it helps individuals to maintain their standard of living in retirement. Without a pension, retirees may have to rely on other sources of income such as their personal savings which may not provide enough money to cover their expenses. Additionally, pensions are typically designed to provide a consistent source of income, which can help retirees to budget and plan for their future expenses.
Whether you're just starting out in your career or approaching retirement, there are several things you can do to make sure you're on track for a comfortable retirement.
Firstly, it's worth considering how much you're paying into your pension. The minimum amount is currently 8% of your salary (5% from you and 3% from your employer), but it's worth checking if you can afford to pay in more. Additionally, if you've lost track of any old pensions, it's important to track them down. The Association of British Insurers estimates that there's around £26 billion to be claimed from lost pensions. We recommend contacting your previous employer or using the government's Pension Tracing Service.
It's important to consider how much pension you'll need. Work out your current expenditures and factor in the things you plan to do in your retirement to determine how much you'll need in the future. The Retirement Living Standards can provide a guide for what income you may need. Additionally, make sure you check your State Pension forecast to see how much you're on track to receive.
Reviewing your investment options is also worth considering to make sure your money is working as hard as it could be. Your employer or pension provider can help, or you can check via your online pension account. It's also important to consider pension charges, such as the Annual Management Charge or Servicing Charge, as these can have a big impact on your returns.
Finally, make use of free resources available, such as the government's Pension Wise service and the MoneyHelper website. You can normally access your defined contribution pension from the age of 55 (or age 57 from 2028) – and you don't have to stop work to begin taking it. Research and understand your options for accessing your pension money, including taking a tax-free lump sum, purchasing an annuity, or taking your money little by little. By taking these steps, you'll be well on your way to securing a comfortable retirement.
